Zomato fires 600 employees amid growth slowdown and AI adoption
What's the story
Zomato has laid off as many as 600 employees from its customer service training program, the Zomato Associate Accelerator Program (ZAAP).
The move comes in response to the slowing growth in the food delivery industry and a project to automate customer service with the help of artificial intelligence.
The company recently launched 'Nugget,' an in-house developed AI-powered customer support platform, which now handles over 15 million monthly interactions across various Zomato platforms.
AI integration
Nugget handles 80% of queries autonomously
Nugget, the AI-driven customer support platform, solves as much as 80% of customer queries without any human intervention. This has drastically reduced the need for a big customer service team.
However, former and current employees have claimed that ZAAP staff in Gurugram and Hyderabad were forced to resign without any formal announcement or warning.
Affected workers were offered a month's salary as compensation, as per Moneycontrol.
Layoff details
Employees claim layoffs were abrupt and unjust
A current ZAAP employee said workers were told on Slack by a senior manager that they had been flagged as "faulty" based on data.
"More than 500 employees have been fired from Gurgaon and Hyderabad offices," a former employee told Outlook Business.
"Some received two or three warning emails before termination but recently, dismissals occurred without prior notice."
"When I was fired, I was asked to leave with a smile so that other employees wouldn't be disturbed," the worker said.
Performance evaluations
Former employees raise concerns over dismissal reasons
Former employees have expressed concerns over the reasons for their dismissals, often citing vague or unfair justifications.
Some were terminated over minor attendance issues, others due to AI-generated performance assessments.
"It was nothing more than a cover-up for mass layoffs," alleged one former employee.
They claimed that Nugget's AI-driven performance assessments, which assign "karma" scores like Gold or Iron, impacted dismissal decisions.
Company status
Zomato's workforce and financial performance
At the end of FY24, Zomato's headcount grew 34% to 8,244 employees, up from 6,173 in FY23.
Despite the increase in headcount, the food delivery giant posted a consolidated net profit of ₹59 crore for Q3 FY25—a steep decline from the ₹138 crore profit posted in the same quarter last year.
However, its revenue from operations witnessed strong year-on-year growth, increasing to ₹5,405 crore from ₹3,288 crore.